Hartford Casualty Insurance Company v. Comanche Construction, Inc. et al

Filing 51

ORDER OF REMAND. This case is REMANDED to the Dyer County Chancery Court. Signed by Chief Judge J. Daniel Breen on 1/4/16. (Breen, J.)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
EASTERN DIVISION
HARTFORD CASUALTY INSURANCE
COMPANY,
Plaintiff,
v.

No. 14-02681

COMANCHE CONSTRUCTION, INC.,
COMANCHE CONSTRUCTION INC. OF
GEORGIA, and SEABRIGHT
INSURANCE COMPANY,
Defendants.
_____________________________________________________________________________
ORDER OF REMAND
_____________________________________________________________________________
I. INTRODUCTION
This is a declaratory judgment action brought on July 31, 2014, in the Chancery Court for
Dyer County, Tennessee. (Docket Entry (“D.E.”) 1-2.) Plaintiff, Hartford Casualty Insurance
Company (“Hartford”), the workers’ compensation carrier for Ford Construction Company (“Ford”),
seeks to have Defendants, Comanche Construction, Inc.; Comanche Construction, Inc. of Georgia
(collectively “Comanche”); and Seabright Insurance Company (“Seabright”), deemed to be the
“responsible employer” of Ford’s employee, Robert Blackwell, under the Tennessee Workers’
Compensation Act (“TWCA”). Tenn. Code Ann. §§ 50-6-101 to -921. Such a finding would trigger
Defendants’ liability for Blackwell’s past, present, and future workers’ compensation benefits for
injuries sustained in a workplace accident.

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On September 4, 2014, the Defendants removed the case to this Court on the basis of
complete diversity between the parties and the amount in controversy exceeding $75,000. (D.E. 1.)
Plaintiffs did not oppose removal. Before the Court is Defendants’ August 31, 2015 Motion to
Dismiss, or in the Alternative, Motion for Summary Judgment, requesting that the Court 1) dismiss
the action for a lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure
12(b)(1) and for failure to state a claim upon which relief may be granted under Rule 12(b)(6), or 2)
grant summary judgment because no genuine issue of material fact exists under Federal Rule of Civil
Procedure 56. (D.E. 37.) Plaintiff responded in opposition to Defendants’ motion (D.E. 45) and also
moved for summary judgment. (D.E. 39.)
II. FACTS ALLEGED
The following facts appear to be undisputed by the parties, unless otherwise noted.
Comanche was a subcontractor hired to perform repair work on the I-155 bridge over the Mississippi
River in Dyersburg, Tennessee. To complete this work, Comanche had to implement traffic controls,
including placement of concrete barrier walls to protect workers from traffic and to protect motorists
from construction hazards. Comanche rented a crane and crane operator from Ford to lift and move
the barriers from a flatbed truck to an area on the bridge where the repairs were taking place.
Because Comanche did not have any of its own crane operators on site, Ford selected and provided
one of its experienced employees, Blackwell, to set up and operate the crane. No written agreement
existed between Comanche and Ford for either the crane rental or Blackwell’s work. Rather, there
was a verbal agreement between Lyle Austin of Comanche and Sam Baggett of Ford to rent the
crane and crane operator for approximately one day.

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On May 7, 2009, the crane was transported to the jobsite by a Ford employee and set up by
Blackwell. Comanche then requested that it be moved closer in order to reach a certain line on the
bridge.

After a dry run, Comanche next asked that the crane be moved again so that its

counterweight would not protrude into the lane of traffic and that Blackwell swing the concrete
barrier away from traffic.
Once Comanche employees connected the crane to the concrete barrier with a clamp,
Blackwell lifted the barrier, which he was going to move and place on the line Comanche had drawn
on the bridge. At that moment, the crane tipped and fell over the side of the bridge. Although
Blackwell was able to jump onto the bridge before the crane went over, he was nonetheless seriously
injured.
Thereafter, Blackwell’s conservators filed a lawsuit against Comanche in the Circuit Court
for Dyer County, Tennessee. See Andrea Blackwell and Frederick Blackwell, Co-Conservators for
the Estate and Person of Robert Blackwell, disabled v. Comanche Construction, Inc. and Comanche
Construction, Inc. of Georgia, No. 2009-CV-149 (Dyer Cty. Cir. Ct. 2009). The Plaintiffs asserted
that Comanche acted negligently and sought damages for Blackwell’s injuries. Hartford filed a
motion to intervene in the tort action to protect its subrogation lien for those workers’ compensation
benefits it had paid to or on behalf of Blackwell since the accident.
Comanche subsequently filed a motion for summary judgment, but before the state court
ruled on the motion, the parties settled. As a result, Comanche paid Blackwell $3.5 million in
exchange for a Complete Release, Indemnity, and Settlement Agreement, which was approved by
the trial court. (D.E. 45-5 ¶¶ 30, 31.) In the agreement, Blackwell released Comanche from any and
all causes of actions, regardless of legal theory, including subrogation and indemnification, arising

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out of the accident. (D.E. 45 at 6-7) As part of the settlement, Hartford acknowledged the “complete
satisfaction of its subrogation lien,” pursuant to Tennessee Code Annotated section 50-6-112 and
agreed to compromise its claim for $1.3 million, which it received from the settlement proceeds paid
by Comanche. (D.E. 45-5 at ¶31.) However, the parties stated that the agreement did not apply to
the claims asserted by Hartford against Comanche in the declaratory judgment action—apparently
referring to the instant case. (Id.) The parties acknowledged that “neither the satisfaction of said lien
nor anything in [the agreement] shall operate to in any way prejudice the complaint seeking
declaratory relief filed by Hartford” against Comanche and Seabright, or any claims asserted therein.
(D.E. 45 at 7.)
III. JURISDICTION
Removal of cases from state to federal court is governed by 28 U.S.C. § 1441(a), which
provides,
any civil action brought in a State court of which the district courts of the United
States have original jurisdiction, may be removed by the defendant or the defendants,
to the district court of the United States for the district and division embracing the
place where such action is pending.
A federal district court has original jurisdiction over any civil action “where the matter in controversy
exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of
different States.” 28 U.S.C. § 1332(a)(1). In actions seeking declaratory or injunctive relief, the party
asserting jurisdiction must establish that the litigation’s value, more likely than not, exceeds $75,000.
Cleveland Hous. Renewal Project v. Deutsche Bank Trust Co., 621 F.3d 554, 560 (6th Cir. 2010)
(citing Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 347 (1977)).

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However, even when the jurisdictional requirements are met, district courts have
discretionary jurisdiction in declaratory judgment actions. Wilton v. Seven Falls Co., 515 U.S. 277,
282 (1995). Title 28 of the United States Code, section 2201 provides:
In a case of actual controversy within its jurisdiction, . . . any court of the United
States, upon the filing of an appropriate pleading, may declare the rights and other
legal relations of any interested party seeking such declaration . . . [and] any such
declaration shall have the force and effect of a final judgment or decree . . . .
28 U.S.C. § 2201 (emphasis added). In Wilton, the United States Supreme Court stated,
“[t]here is . . . nothing automatic or obligatory about the assumption of jurisdiction by
a federal court to hear a declaratory judgment action.” By the Declaratory Judgment
Act, Congress sought to place a remedial arrow in the district court’s quiver; it
created an opportunity, rather than a duty, to grant a new form of relief to qualifying
litigants. Consistent with the nonobligatory nature of the remedy, a district court is
authorized, in the sound exercise of its discretion, to stay or to dismiss an action
seeking a declaratory judgment before trial or after all arguments have drawn to a
close. In the declaratory judgment context, the normal principle that federal courts
should adjudicate claims within their jurisdiction yields to considerations of
practicality and wise judicial administration.
515 U.S. at 288 (citations omitted) (quoting E. Borchard, Declaratory Judgments 312-314 (2d ed.
1941)).

Thus, this Court has discretion when deciding whether to entertain a complaint for

declaratory judgment. See Able Cartage, Inc. v. Strategic Outsourcing, Inc., No. 1:04-1039-T-AN,
2005 WL 2333924, at *5 (W.D. Tenn. Sept. 6, 2005); see also Wilton, 515 U.S. at 282 (“[D]istrict
courts possess discretion in determining whether and when to entertain an action under the
Declaratory Judgment Act . . . , even when the suit otherwise satisfies subject matter jurisdictional
prerequisites.”); A. L. Mechling Barge Lines, Inc. v. United States, 368 U.S. 324, 331 (1961)
(“Declaratory judgment is a remedy committed to judicial discretion.”).
The Sixth Circuit has adopted a five-factor test for consideration by a district court when
determining whether jurisdiction should be exercised over a declaratory judgment action:

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(1)

whether the judgment would settle the controversy;

(2)
whether the declaratory judgment action would serve a useful purpose in
clarifying the legal relations at issue;
(3)
whether the declaratory remedy is being used merely for the purpose of
“procedural fencing” or “to provide an arena for a race for res judicata”;
(4) whether the use of a declaratory action would increase the friction between our
federal and state courts and improperly encroach on state jurisdiction; and
(5)

whether there is an alternative remedy that is better or more effective.

AmSouth Bank v. Dale, 386 F.3d 763, 785 (6th Cir. 2004) (citing Scottsdale Ins. Co. v. Roumph, 211
F.3d 964, 968 (6th Cir. 2000)) (finding the district court’s assumption of jurisdiction over a
declaratory action to be an abuse of discretion).
As to the first factor, it is unclear whether this action would settle the entire controversy.
Were this Court to render a decision in this case, the parties could attempt to relitigate the same or
similar issues either in the Dyer County courts or in the workers’ compensation system. (See D.E. 46
at 7-9, D.E. 49 at 6-8.) Furthermore, in the event of an unfavorable ruling, the Defendants could
attempt to seek indemnification from Blackwell, who is not a party in this lawsuit. (Id.) Thus, a
subsequent state court action could render a decision in this declaratory action merely advisory. Cf.
Bituminous Cas. Corp. v. J & L Lumber Co., Inc., 373 F.3d 807, 812-13 (6th Cir. 2004)
(“[D]eclaratory judgment actions seeking an advance opinion on indemnity issues are seldom helpful
in resolving an ongoing action in another court.”). Accordingly, the Court finds that this first factor
weighs against the exercise of jurisdiction.
Factor number two, whether the declaratory judgment action would provide a useful purpose
in clarifying the legal relations at issue, weighs similarly against the exercise of jurisdiction. “The
‘useful purpose’ served by [a] declaratory judgment action is the clarification of legal duties for the
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future . . .” AmSouth Bank, 386 F.3d at 786. For example, “a party with an ongoing contractual
relationship who has been accused of breach can go to court and have the contract definitively
interpreted [in a declaratory judgment action], thus allowing it to conform its behavior to the law and
stop the potential accrual of damages.” Medtronic, Inc. v. Royer, No. 3:12-CV-00414-JHM, 2013
WL 1411227, at *3 (W.D. Ky. Apr. 8, 2013) (quoting AmSouth Bank, 386 F.3d at 786).
In this case, however, no such underlying contract or obligation is present. Hartford seeks to
“declare the rights and obligations of the parties as they pertain to the responsibilities for payment of
past and future workers’ compensation benefits,” (D.E. 1-2 at 4), and shift responsibility for those
payments to Comanche. Nevertheless, it appears from the pleadings that no workers’ compensation
case has been filed and no court order or agreement exists outlining the scope of those
responsibilities.

Although the TWCA “does not determine, as between contractors and

subcontractors, who is primarily liable,” Travelers Ins. Co. v. Fidelity & Cas. Co. of N.Y., 409
S.W.2d 175, 178 (1966), the underlying financial responsibility arises from the TWCA. Thus far, it
does not appear to the Court that any judicial body has determined Hartford’s liability to Blackwell
under that body of law. See Nissan N. Am., Inc. v. Schrader Elecs., Ltd., No. 3:13-CV-0180, 2013
WL 3778729, at *1 (M.D. Tenn. July 18, 2013) (“Under Tennessee law, [indemnification] claims do
not accrue until the end of the pertinent litigation . . . .). Thus, the relative usefulness of this
declaratory judgment action is questionable, and the Court finds that this factor weighs against the
exercise of jurisdiction.
The third factor requires the Court to determine whether the declaratory remedy is being used
merely for the purpose of “procedural fencing” or “to provide an arena for a race for res judicata.”
AmSouth Bank, 386 F.3d at 785. It is unclear what effect, if any, an action in this Court would have

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on an action brought within the workers’ compensation system. Upon examination of the pleadings,
it does not appear that this case presents the appearance of a race for a binding decision. The Court is
inclined to give Hartford the benefit of the doubt that no improper motive caused the filing of this
action. Accordingly, the third factor does not weigh against the Court’s exercise of jurisdiction.
The fourth factor requires consideration of the principles of federalism and the potential for
conflict between state and federal courts. Hartford asks this Court to decide the legal obligations of
parties within the workers’ compensation legal framework. The TWCA is an ever-evolving body of
state law with unique components and requirements. See Clanton v. Cain-Sloan Co., 677 S.W.2d
441, 443 (Tenn. 1984). It is a no-fault system that, since 1919, “has provided compensation for
injured employees, eliminated employers’ potential defenses, set attorney’s fees, provided for a
system of adjudication, abrogated the right of employees to pursue common law negligence actions,
and capped employees’ potential recovery” in Tennessee. Yardley v. Hosp. Housekeeping Sys., LLC,
470 S.W.3d 800, 804 (Tenn. 2015); see also Tenn. Code Ann. §§ 50-6-101 to -921. There is no
federal equivalent within this Court’s jurisdiction.
Hartford seeks the Court’s declaration that Comanche 1) was Blackwell’s “employer” for
workers’ compensation purposes, and 2) is required to indemnify Hartford for all past, present, and
future workers’ compensation payments. Resolving this claim involves the interplay between
Tennessee contract, indemnity, and workers’ compensation law and an inherent tension present
among these laws. Compare Winter v. Smith, 914 S.W.2d 527, 542 (Tenn. Ct. App. 1995) (“In the
absence of an express contract, an obligation to indemnify will be implied only if the party from
who[m] indemnification is sought breached a contract or engaged in some other related tortious
conduct.”), with Lang v. Nissan N. Am., Inc., 170 S.W.3d 564, 572-73 (Tenn. 2005) (TWCA creates

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a “delicately balanced quid pro quo imposing no-fault liability in exchange for immunity from tort
claims and limits on the amount of workers’ compensation liability . . . .” (quoting Joseph H. King,
Jr., The Exclusiveness of an Employee’s Workers’ Compensation Remedy Against His Employer, 55
Tenn. L. Rev. 405, 411-12 (1988))). Although the TWCA explicitly creates a no-fault system, it
would appear that recent Tennessee case law requires a finding of at least negligence in order to
require indemnification, absent an express agreement. See Winter, 914 S.W.2d at 542.
As the parties did not have a contract containing an express indemnification clause, important
policy questions must be answered in order to resolve this case. The Tennessee state court system is
equally equipped to decide such matters of Tennessee law. For this Court to retain jurisdiction over
such a case could increase the friction between our federal and state courts and be seen as improperly
encroaching on state jurisdiction. See AmSouth, 386 F.3d at 785. Thus, the fourth factor weighs
against the exercise of jurisdiction.
The fifth factor inquires whether a better, more effective remedy exists. In this case, the
alternative to this Court’s exercise of jurisdiction—remanding the case to the chancery court—is an
arguably more effective solution. See id. The chancery courts of Tennessee, along with its circuit
courts, have served as courts of appeal in workers’ compensation cases once the administrative
review process is exhausted. See, e.g., Ratledge v. Langley Enters., No. E2014-02089-SC-R3-WC,
2015 WL 5677184 (Tenn. Workers Comp. Panel Sept. 28, 2015) (worker’s compensation appeal
originating in Hamilton County Chancery Court); Riley v. INA/AETNA Ins. Co., 825 S.W.2d 80, 81
(Tenn. 1992)) (worker’s compensation appeal originating in Dyer County Chancery Court). Thus,
they are well suited to decide the important policy implications involved in this case. See Great
Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 298 (1943) (“It is in the public interest that

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federal courts of equity should exercise their discretionary power to grant or withhold relief so as to
avoid needless obstruction of the domestic policy of the states.”). Moreover, the chancery courts
have “all the powers, privileges and jurisdiction properly and rightfully incident to a court of equity,”
Tenn. Code Ann. § 16-11-101 (2015), and this action is one based in equity. See In re Air Crash
Disaster, 86 F.3d 498, 548 (6th Cir. 1996) (“Indemnity serves to shift the burden of loss between
parties when equity so requires.”). Thus, the Dyer County Chancery Court—where this action was
originally filed— is the more appropriate forum to hear this lawsuit.
IV. CONCLUSION
For the reasons stated herein, the Court finds that the AmSouth Bank factors weigh against the
exercise of discretionary jurisdiction. Accordingly, this case is REMANDED to the Dyer County
Chancery Court.

IT IS SO ORDERED this 4th day of January 2016.

s/ J. DANIEL BREEN
CHIEF UNITED STATES DISTRICT JUDGE

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